Correlation Between Microsoft and 26443CAA1

Can any of the company-specific risk be diversified away by investing in both Microsoft and 26443CAA1 at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microsoft and 26443CAA1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and DUKE UNIV HEALTH, you can compare the effects of market volatilities on Microsoft and 26443CAA1 and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microsoft with a short position of 26443CAA1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and 26443CAA1.

Diversification Opportunities for Microsoft and 26443CAA1

0.53

Correlation Coefficient

Microsoft  26443CAA1

Very weak diversification

The 3 months correlation between Microsoft and 26443CAA1 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and DUKE UNIV HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE UNIV HEALTH and Microsoft is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microsoft are associated (or correlated) with 26443CAA1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE UNIV HEALTH has no effect on the direction of Microsoft i.e., Microsoft and 26443CAA1 go up and down completely randomly.

Pair Corralation between Microsoft and 26443CAA1

Given the investment horizon of 90 days Microsoft is expected to under-perform the 26443CAA1. In addition to that, Microsoft is 1.11 times more volatile than DUKE UNIV HEALTH. It trades about -0.11 of its total potential returns per unit of risk. DUKE UNIV HEALTH is currently generating about 0.19 per unit of volatility. If you would invest  7,796  in DUKE UNIV HEALTH on December 26, 2024 and sell it today you would earn a total of  581.00  from holding DUKE UNIV HEALTH or generate 7.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	44.26%
Values	Daily Returns

Microsoft  vs.  DUKE UNIV HEALTH

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

DUKE UNIV HEALTH

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DUKE UNIV HEALTH are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 26443CAA1 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Microsoft and 26443CAA1

The main advantage of trading using opposite Microsoft and 26443CAA1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, 26443CAA1 can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in 26443CAA1 will offset losses from the drop in 26443CAA1's long position.

The idea behind Microsoft and DUKE UNIV HEALTH pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.